With the fall of Turkish lira, has fueled doubts and fears of financial fallout which could affect the other emerging markets as well as banking systems in Europe.
Blaming the nose-diving currency on an operation against Turkey, Turkish President Recep Tayyip Erdogen rejected the idea that the country’s financial conditions is in shambles. According to a strategist from J.P. Morgan Asset Management, the situation is really bad as the financial condition is deteriorating, unstable investor sentiments, and incompetent management of the economy and tariff pressures from U.S.A.
BEGINNING OF TURKEY’S PROBLEM:
Lately, Turkey was considered as one of the fastest growing economies in the world, even overtaking giants like China and India. Turkey reported 7.22 percent growth in its GDP in the second quarter of 2018. This growth was mostly driven by foreign currency debt. After the global financial crisis, central banks around the world were pumping money where as the Turkish banks and organizations were stacking up debt denominated in American dollars.
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